No company ever wants to consider what would happen if they were sued. Some business owners act as if they will never be sued, but the risk of is extremely high for a company that operates in a heavily regulated and dangerous field such as transportation. At one time or another, every for-hire vehicle (FHV) base has been or will be sued. This is a simple reality. Putting aside business disputes with vendors and other businesses, the riskiest proposition for an FHV base is being sued for the negligence of a driver who receives a dispatch or an e-hail from an e-hail provider.
Let’s face it: Being transported in New York City involves a risk of a motor vehicle accident. Risk to the customer/passenger, the FHV driver, the FHV vehicle owner, and the dispatching entity. New York City (NYC) is the most populated city in the United States. Not surprisingly, heavily congested roads in a densely populated area result in a lot of traffic accidents. According to U.S. News and World Report, NYC ranks 4th for the worst traffic in the nation.
In 2019, there were over 130,000 car accidents in NYC. In 2020, the year of a raging pandemic reported collisions declined by roughly 50%, for an approximate total of 88,000. In 2021, a year still largely influenced by COVID, accidents increased to a total approximation of 97,000. In 2022, there were over 100,000 accidents in NYC. So, despite the fact that NYC came to a near-halt in 2020, there was still an average of 240 car accidents on the city’s streets every single day that year.
While the total number of car crashes in NYC declined in 2020 and 2021 relative to the previous two-year period, the percentage of those resulting in minor injuries and catastrophic injuries increased. In 2020 and 2021, more than half of the car accidents in the city resulted in an injury. The accidents that result in injuries are the ones that lead to lawsuits. Defending lawsuits, even ones that lack merit, is a costly endeavor. Businesses don’t typically call a lawyer before they need one. They call after they need one. In this context, a business will contact a lawyer when it is sued as a result of a car accident.
Although a FHV base or e-hail provider may not own the vehicle in which their customer is being transported and may not employ the person operating the vehicle that is being used to transport their customer, that does not insulate the FHV ecosystem from being sued. Negligent hiring and supervision are claims that can be made against an FHV base (or e-hail provider) even when the driver is an independent contractor. New claims are popping up that can be made against an FHV base regardless of whether the driver is your employee or not. These claims include negligent hiring and agency, and joint venture liability.
The most recent claim being utilized by the Plaintiff’s personal injury bar is called negligent distraction. Since almost all FHV bases and all e-hail providers require the driver to utilize some sort of smartphone application, there is always going to be a claim that the use of the smartphone app while driving caused the driver to become distracted, thus causing an accident resulting in injuries. Drivers are prohibited from using handheld electronic devices, including phones, while operating a motor vehicle. In the FHV industry, the TLC rules mandate that FHV drivers only use a smartphone device that is mounted in a fixed position and not hand-held, and use of the electronic device is limited to either voice or one-touch preprogrammed buttons or keys while the vehicle is in motion. The nature of these claims is beyond the scope of this article but suffice it to say that lawsuits against FHV bases are on the rise and apply to every FHV base and e-hail provider.
Moreover, legal fees in litigation matters involving car accidents in the FHV industry are almost always very high. That is the cost of paying for a lawyer when there is a proverbial fire rather than retaining one ahead of time for other business and transactional matters that affect all FHV bases.
To make matters worse, while NYC has long been known for its beautiful city skyline, it is also known for its sky-high verdicts. Unreasonably high verdicts are known as nuclear verdicts. Nuclear verdicts burden businesses in the city and bog down economic growth. Liability-expanding laws have led to a never-ending surge of lawsuits in courts across the state, and third-party litigation financing feeds the city’s litigation machine.
NYC continues to see a surging number of nuclear verdicts, obtained by plaintiffs’ lawyers who use manipulation tactics to drive up awards using New York’s generous liability laws. One of the main drivers of nuclear verdicts is a New York law that allows plaintiffs’ lawyers to request that a jury award a specific dollar amount for any element of damages. Plaintiffs’ lawyers use this law to engage in a tactic known as “anchoring,” in which they place an extremely high figure into the jurors’ minds to start as a base dollar amount for a pain and suffering award, which, unlike medical expenses or lost wages, lacks a means of objective measurement.
Although New York law confines a plaintiff’s recovery to “reasonable compensation,” its courts have repeatedly awarded amounts beyond its former de facto cap of $10 million for a pain and suffering award. According to a 2022 study released by the New York Civil Justice Institute, in 90% of the cases where a plaintiff’s lawyer asked a jury to award more than $20 million, the jury awarded at least the level requested. According to a recent study by the U.S. Chamber, there were 151 recorded nuclear verdicts between 2010 and 2019 in New York totaling over $5 billion.
To evaluate your risk, you must have certain seasoned professionals, including a lawyer, perform a top-to-bottom analysis of the business operations of your FHV base. Some FHV bases operate in a manner that they do not necessarily know involves a large liability risk. If I were a base owner, I would want to know what that risk is and how to mitigate against risk and losses. Don’t be penny-wise and pound-foolish. It’s a bad idea to turn a blind eye to these issues and problems. If you do, then you proceed at your own peril. As always, I remain committed to helping the FHV industry survive and thrive.
